The cost of home ownership in Greater Victoria and across Canada became more affordable in the most recent quarter due to a modest decline in home prices and gains in Canadian household incomes, says a Royal Bank study.
RBC's affordability index for a detached bungalow stood at 42 per cent of income nationally in the third quarter.
That means an owner would need to spend 42 per cent of pre-tax annual income to pay for mortgage payments, utilities and property taxes - one percentage point lower than in the second quarter of 2012.
That assumes an average home price of $362,100 and an average qualifying income of $78,100, but those measures varied widely from market to market.
The index fell even more for two-storey homes, by 1.2 percentage points to 47.8 per cent and eased 0.6 percentage points to 28 per cent for condos.
"The costs of owning a home at current market prices took a smaller bite of household budget in all major markets in Canada in the third quarter of 2012," the report said.
Homes became slightly more affordable in Greater Victoria. The index for a detached bungalow moved to 42.1 per cent from 44.1 per cent. The affordability of bungalows has improved in the region every quarter since April 2010 when it was 55.8 per cent.
The capital region's index for a two-storey house stood at 42.6 per cent, a change from 44.2 per cent. Back in July 2007, when the local real estate market was sizzling hot, the index was 64 per cent for a two-storey house.
Condominium affordabilty came in at 25.7 per cent, compared to 26.8 per cent the previous quarter.
Greater Victoria's residential real estate market saw sales decline to 373 in October compared with 383 the same month a year ago.
The average price for a single family home was $576,720, a decrease of two per cent from the average in October 2011, the Victoria Real Estate Board said this month. The median price is down 4.5 per cent.
RBC, which publishes the index quarterly, says ultra-low interest rates have been the key factor in keeping affordability levels from reaching dangerous levels in recent years.
Still, top government officials have warned that low interest rates are encouraging some buyers to spend beyond what they'll be able to afford when rates inevitably rise. Household debt stands at a record 163 per cent of income.
That means for every dollar Canadians earn, they owe $1.63 in debt.
